Tuesday, February 17, 2009

Check it Out: Everything Old is New Again Edition

These guys were able to turn a USD 100k plus, HD television into Pong - and people loved it. Can we call it a classic? Thank you Nolan Bushnell and Ralph Baer.

Game Prices Are Falling: Did We Really Think This Through Edition

The argument for lowering game prices is an easy one. When I saw Ubi lower prices at the end of the year, I was about to write a post about the erosion of price and how it was about time we figured it out. We are the most expensive form of media not only at Wal Mart, our number one retailer, but in the entire market. The argument is supported by the history of other media. Films on tape first came out at USD99 and the purchase market really wasn't there. Sales didn't take off until the price was cut by two thirds. DVD's on the other hand were introduced at an average price of USD 20 and the market took off immediately. We don't even have to go outside our market to find precedent.

I remember when we were releasing Tomb Raider 2. The sales of Tomb Raider doubled when we cut the price from USD 49 to USD 39, trebled at the cut to USD 29 and then quadrupled at the cut to USD 19. As an econ major, I saw the market was clearing dictating USD 19 as the proper price for a game. I suggested Tomb 2 be cut into four games of four levels each and sold for USD 19. The CEO of the group promptly lit me on fire and tossed me out the third story window. I thought he was wrong. I was sure he was wrong this year when I saw prices eroding during the fourth quarter. Then I started to look beyond what I thought was common sense and the stuff they taught me at UCLA. I found people who study pricing philosophy. They believe the lower prices did not drive the sales of the games, it was actually the higher prices. In fact, the same theory explains why Gamestop can be so successful undercutting new games by only USD 5.

One of the best explanations I've seen is in Dan Ariely's book, Predictably Irrational. I know books are foreign objects in the hands of most gamers, but you can get the relevant information in the first chapter of this one. Ariely explains:

We are always looking at things around us in relation to others. . . . we not only tend to compare things with one another but also tend to focus on comparing things that are easily comparable - and avoid comparing things that cannot be compared easily.

The funny thing is, when we do these comparisons, we tend to pick the middle price. He talks about a number of experiments he conducted and gives a few real world examples. One quick reference is to a restaurant consultant. The consultant explained in a New York Times article that he could raise a restaurants revenue by adding high priced dishes. The people would not necessarily order the new higher priced dishes, but by putting them on the menu, he increased the sales of the second most expensive. In comparison, they were less expensive. Another example involved a breadmaker at Williams Sonoma. When the company introduced the product, bread makers were new to the market and no one had anything to compare it to. There was only one model and it cost USD 275. It failed to sell. The company then introduced a similar "upgraded" breadmaker for USD 475 and it didn't sell either, but sales of the USD 275 breadmaker took off. It seemed like a bargain. Ariely calls this the decoy effect.

We see the same thing all across all markets (he even proves it out in romance). It shows up in price comparison's posted in stores, generic medications and even within a store when the discount is advertised next to the price. It also shows up in games. Fortunately for us, our consumers compare games to games, not broader media. If they did compare them to broader media, they would be perceived as a rip off. When they do compare them within the category, the behaviors play out as Ariely would predict.

A normal console game is priced at USD 60. However, in the era of Xbox Live, used games, Gamefly and free online games they become the decoy. A USD 55 game would not be so appealing, unless there was a USD 60 game for comparison. The same can be said of a gamefly subscription or USD 10 game on Live. We unknowingly see the same effect with special editions. When a special edition comes out for Fallout 3 or GTA 4, it actually serves as a decoy, increasing sales of the USD 60 price. These small changes can drive incremental sales, but look what happens when the price is lowered to USD 40, as Ubi did last Christmas. The floodgates open. Consumers see this as a tremendous bargain. They are able to compare the brand new, high quality game for two thirds the price of all the others. A clear bargain. This re frames the argument in favor of 2k's football prior to the NFL exclusive with EA. 2k's football did not sell well because it was priced at USD 20. It sold well because Madden was priced at USD 50. But what happens if all prices are reduced?

If all prices are reduced, we will lose our decoy. For a while, the perception of reduced value will cause a significant increase in sales. But then, like in the DVD market which plateaued and is now on the decline, consumers will become conditioned to the lower price and value will only be perceived in still lower prices. In the DVD market prices have fallen as low as USD .99. In fact, Wal-Mart's best selling DVD's are priced at USD 5.

I am not saying we should raise the price of games - necessarily - but perhaps it is too early to lower across the board. Rather than lower the launch price, what would happen if we shortened the period we hold full price? Games could continue to be released at USD 60 and the hardcore will continue to buy. But if prices were reduced within a month or so, and then again, and then again, as a matter of course, we would be able to bring in a new audience. Each successive price drop would serve as a decoy to the next and new releases would be decoys for all. The market would continue to see increased value in USD 50 and USD 40 games, rather than take them for granted.

Maybe books aren't so bad after all, and maybe Charles was right - well not with the lighting on fire part.

Monday, February 16, 2009

Citizen Kane of Games: Poisoning Young Developers' Minds Edition

A couple nights ago I had the good fortune of speaking in front of a class of young designers, engineers and business people in USC's game program. They are full of great ideas and I am confident many of them will create things I can't even imagine today. Their young minds are so gooey and malleable and they bring the unadulterated exuberance, brilliance and naivete of youth which has not been beaten down by years in the system. They still talk about what they can do, rather than the reasons things can't be done. Their faces look up, rather than down with hunched shoulders. All the more reason for me to be so disappointed to hear they are being shackled by the insecurities of our generation when they asked whether we have seen the "Citizen Kane" of games and if not, when it will be made. I guess this is appropriate. I mean after all, everyone considers Citizen Kane to be the Taj Mahal of games. No, they really don't because that would be stupid. I wonder how long a medium can survive if it measures its success primarily against another media.

This meme started when Trip Hawkins first ran EA ads asking whether a computer can make you cry. This morphed into the question of when we would see the "Citizen Kane" of games. It is also a function of the chip resting on many game makers shoulders over the film industry, and the number of designers who really want to be directors. The Citizen Kane reference is interpreted to apply only to emotional aspects, and not the unique attributes of our medium. I submit, while this is an interesting question, but it is a completely invalid measure of the merit of a game. Film is a medium uniquely tailored to draw upon emotion, it is one of the few tools available to create a suspension of disbelief. It is also relatively easy as the viewer, by definition, cedes control of the happenings to the director. While the is not best known for ability to convey emotion, George Lucas said, "Anyone can involve the audience emotionally, Just show them a kitten, then wring its neck."

For years, scores of games designers worship at the false alter of film and emotion as measures for their art. Enough is enough. Let's stop this and protect our next generation of game creators from this pain. Each one of these media views itself as a stand alone media. Film directors, musicians, architects, sculptors, painters all do great things measured only be the greatness of the thing they did. Why can't we? You may lose yourself of ran afternoon in a great film, but what film made you lose a month?

To say games must convey emotion, or we MUST care about the main character, is to ignore the rest of the colors in the palate from which game designers create. It is also doing a tremendous disservice to designers like Miyamoto-san, who inspired us all through game play alone. No one who lost a month or so of their childhood - or adulthood in my case - to Mario on the NES reminisces about their connection to Mario. The only tear I shed was when I kept running out of time at the last level and had to call the help line to make my way through. The core conceit in a game control. The disbelief is based on the player's ability to move through the environment and interact with objects and characters in a fanciful environment. We don't put a game done because we don't care about a character. We put it down because the game mechanic sucks. Players may be drawn to continue by a connection to the character or emotions created by the game, but the driving force to continue is the game mechanic. A good one will keep you regardless of story. A bad one will repel you, even if it sat on top of The Godfather.

This is not to say emotion and story have no place in games. They do, in certain games. Let's call those "story driven games." Oh, yeah, we already do. Ico is the example everyone always uses, and more recently people talk about the emotion achieved by the Braid and the story portrayed by Bioshock. These are wonderful games but represent only one type of game. Best selling and critically praised games like Call of Duty, Halo or Resident Evil purport to have stories, but they are really no deeper than premises draped over a porn film. No coincidence, as they too are only there to set up the action. You may argue the stories are rich in Halo or Call of Duty, but the hours lost to play are not in the single player story driven part, they are in the completely emotion and story free lands of multiplayer.

Citizen Kane is celebrated today for a number of reasons. Aside from being a groundbreaking work on many levels, it stands the test of time, and continues to inspire film makers not only to greatness, but to get into the business. When my son watches the film with me, he enjoys it. Even though it is almost 70 years old and he is 13, it is not something Dad is making him watch. He is comfortable with it because it is good. Sure, a lot of things happened for the first time in the film, but he doesn't know it. The groundbreaking elements influenced so many other films they are now mainstream, but the ability to see the original allows us to see a sense of where it came from. Until recently, this concept was foreign to games.

Prior to this generation games that stood the test of time were relegated to the scrap heap of non-compatibility. Sure we could go back a generation, and with MAME I can show him the games that ate my time and discretionary money quarter by quarter. But he couldn't play the ones locked on the carts. Gamers and students of the medium, were forced to treat these things like the microfiche I used for research in elementary school. They were oddities, playable only through old systems owned by few and traded only on ebay. With the advent of Xbox Live, Wiiware and PSN, my son, and all gamers can play the original Mario, Joust and Twisted Metal as they were meant to be. We are now inviting a new generation of gamers to see everything and help us define the "classics."

So in our search for the medium defining game, let's shed the blinders of Citizen Kane and ask where we have truly seen greatness. Did one game inform every game we see today? Did one game drive the great designers of today to be a part of the business? Does one game make a team to collectively cry because they know they will never make something so great and come together trying to do it anyways?

When we limit ourselves to emotion, everyone answers Ico. Consensus is building around this one game for the single element. Not to detract from Ico, which is truly a great game, if we expand our view to judge only within our medium, considering all the tools and elements we bring to a game the list would change and consensus would build around a game. It could be the first Mario, Pong, Karateka, Prince of Persia, Madden, Doom or something else. These are just the ones off the top of my head. It may be too early to tell, but I don't thinks so.

As the debate continues, let's keep it in our medium. Rather than asking our students whether the Citizen of Kane has been created, let's see the film school ask whether the Mario of film has been achieved.

Monday, February 9, 2009

Facebook: Worlds Collide Edition

Worlds Collide Theory
A theory which states that a man must keep his personal life (i.e. friends) separate from his relationship side (i.e. girlfriend). Should the two worlds come into contact with each other (by means of his girlfriend becoming friends with his friends), both worlds blow up.
"If Relationship George walks through that door, he will kill Independent George! A George divided against itself, cannot stand!" - George Costanza

Facebook is the Elaine Benes of the new millennium. Elaine's befriending George's fiance threatened a cosmic collision of epic proportion. Elaine was the instigator only because Seinfeld happened in roughly 10 BF ("Before Facebook"). Today, Facebook realigns the cosmos, constantly putting each of our worlds at risk of collision and in some cases, I fear, supernova. I wrote Facebook's missing buttons before - I would still love to have a "what are thinking?" button - but as the population grows, the issues multiply exponentially.

George dealt with a relationship life and an independent life. Each of us may have a relationship life, professional life, college life, high school life, summer camp life, hobby life and who knows what other kind of life. In BF times it was easy to keep these lives separate. Every once in a while an errant email would cause worlds kiss against each other, but it was always easily explained. Living in AF it is if teleporters were installed between worlds with special closed circuit broadcasts filling in the spaces in between. The situation would not be so bad if the growth was not so insidious.

First you find a settler from another world asking for entry. Some waft in like a fragrance on a summer wind. Others hit you like a brick in your face. The requests from people who with a few pixels on the screen are able to let you relive an extraordinarily painful childhood memory in a special way heretofore reserved only for your mother can only be ignored. Sadly, we can't do anything worse. The others, let's call them settlers, are accepted in what feels like a benign move at the time. As these people grab a freehold in your world, they leave the door open to all the other members of the world from which the come. They are not your friends, they are scouts from alternate personal universes. Once they are in, the teleport is open and there is nothing you can do.

I have to admit, I take some voyeuristic pleasure in looking at the friends listed in these scouts' profiles. Some have a broad range of friends. Some have completely stagnated and are frozen in time with profiles populated only by people present with me in that distant world 25 years ago. These are the most dangerous. They are trying to suck you back in. "Wow, we found you, I haven't seen you in 25 years and we never really talked, but look at my kids." Followed quickly with come to the reunion, everyone will be there." Of course "everyone" is comprised of all of those people you chose not to speak with for the past 25 years. A single friend may be lost by accident of time. An entire group, or in this case world, is by design. Others have full rich lives populated by people I never heard of. They moved on. They are safe. The reconnection is only a mildly interesting sidenote to a moment in a day. "Hey, I remember that guy, I'll say hey."

In the beginning I thought it was ok to accept someone's invitation when they were on the cusp. I do know them - a bit - I don't hate them, and I don't want to be rude and ignore them. I quickly learned its not. There seems to be an obvious and apparent inverse relationship between how much I care to know about the person and the number of status updates they make. I just wish these people would think before broadcasting to everyone in the world. Do I really have to know someone is "happy the window is open" or "clearing out the clutter" or "is preparing for a meeting." I may be a bit of a curmudgeon. No, scratch them, I know I am an asshole, but do I really have to know these things. I never thought I had anything significant enough to update in a status line until yesterday, when my population reached critical mass and my worlds collided.

My wife of 18 years, Sari, joined facebook and filled out her profile. Sari was pulled on by one of her friends. She would really rather talk to people than auto communicate. As Sari crosses worlds which have never been crossed by me, this one action, tipped the balance. When she joined, I updated my relationship status and we said we are married. Facebook took it up on itself to celebrate our special day. It sent an update across all my worlds, saying I am now married. I guess this is technically accurate. I am "now" married. It did not mention, I was also married yesterday and every day before yesterday for the prior 18 and half years. Again, not such a big deal, unless everyone thinks it just happened.

I started to receive congratulations on line from business contacts who never met Sari. Friends sent sarcastic comments. I also got a bunch of emails asking when the wedding happened, and suggesting disappointment at not being invited to the special day. I could either respond to each one individually, or do the thing I hated most. Act under the assumption they cared, and send a message about my life to everyone I know through facebook. I rationalized I had to do it before people started sending gifts.

So like Bruce Willis blowing up the meteor to avoid a cataclysmic collision in Armageddon, I typed a status update. It stung for a bit, I felt a tinge of narcissism as I pushed the button, but it went out. A bright light and strong wind blew me back in chair, I recognized this as the wind deflected from the force of the near miss. I took it as a warning.

I now stand, ever vigilant - like Emperor Palpatine at the center of his intergalactic chamber staring at Senators from potentially warring worlds - monitoring communications, controlling defense lines at the borders and watching interworld play to make sure each world is safe for its citizenry. For those of you who are connected to me through facebook or linked in, with this blog post, I pledge to keep you safe from the shrapnel of my world's colliding

TED Conference: Rocket Launching Boba Fett Edition

I just got back from the TED Conference. It was my 7th. My first was in 1997 and I took a few years off after 2002. The conference has changed a lot over the years. Richard Saul Wurman used to treat it as his own personal dinner party. He populated the stage -and audience - with fascinating people talking passionately about things they loved. If business or philanthropy happened, it was organic. Chris Anderson, who took over officially in 2003, saw an opportunity to harness the power of the crowd and encourage things to happen. Both were right, and both put on a great show which can only be characterized as Mental Floss. The stage and the crowd are full of people who just do things. Big things, small things and in between. Whether I agree with them or not, there is no questioning their moving forward. You can read about the big names who show up, cool announcements and great talks at other sites - tons of blogs and articles are already out, with more to follow. I want to talk about a few spectacular off stage happenings. Wurman used to talk about TED moments. Times on stage when a speakers' words resonated across the entire room and the audience stared in emotionally charged silence, followed by a roaring standing ovation. My TED moments happened when I talked to strangers.

The first one happened the first night. I found myself across the table from a wonderful couple from Redlands. The gentlemen, and he certainly was one, told me he had been in the map business for 40 years (later, someone told me he actually founded and ran the largest privately held software company in the world and had 4,000 employees and over one million customers). We started talking about education. He told me a story about giving his software to a school in Detroit. A science teacher gave the program to the kids and taught them to use it. One of the boys in the class had a brother who had died of lead poisoning. There were others in the neighborhood who were sick as well. They were able to use the program to identify a locus of lead issues in people and build a report they presented to the city council. It turned out the lead was coming from the paint in dilapidated homes. The council heard the argument and the mayor provided a USD 300,000 grant from the Department of Housing and Urban Development to make the repairs. The students paid themselves and other students from the grant to repair the houses. They felt empowered and a new level of self esteem. I thought the story was great and told him about how important I believe it is to know why you are in school. I told him about my grandfather attending trade school at the age of 14 to learn pharmacy. I threw out the school was Cass Tech in Detroit. It turns out this was the school where he donated the software.

The next one happened at dinner on Friday. I was invited to dinner of game folks at TED. Toward the end of dinner I found myself sitting next to Henck Rogers, the shepherd of Tetris. Henck had a heart attack at a young age and was rescued by an angioplasty and survives today with stints supporting his arteries. As a game guy, he laughs that they are "wire frames." He was telling the story about his experience in the ambulance to the guy across the table. The guy happened to be sitting next to Dean Kamen and while it is a cool side note, Dean is not relevant to this one. As Henck was telling the story, the guy interrupted to explain he created the angioplasty procedure and his company made the stint. Henck reached across the table and shook his hand, thanking him for saving his life.

Finally, on a more personal note, I met a hero. Again at dinner, I sat down next to a stranger who turned out to be fascinating. I introduced myself to Ed Schifman. He is retired and said he was in the strategy game business years and years ago. He is a very nice man. Then he started talking about this job he had when he was 26. He was head of design at Kenner. One day the CEO called him in and sent him to watch a film they picked up. No one else wanted it and Kenner ended up with the license. He went to see Star Wars. He was blown away. He knew there was a big opportunity, but it was May and there was no way to get product on the shelf for Christmas. We also have to remember, this was well before the action figure era and no one really cared about licensed merchandise. This didn't stop Ed. While he knew he couldn't get product out of China in time to get on the shelf, he knew he could get a box. After much cajoling, he was able to convince market leading K Mart to accept boxes stocked with rain check instead of action figures. A legend was born. Ed didn't take no for an answer and to say he thought out of the box is an understatement. He reinvented the box.

I am not an avid Star Wars collector but I have walked among them. I would have done a disservice to all my colleagues if I did not ask the question to the head of design at Kenner at the time.

"Ed, legend tells of a rocket launching Boba Fett. It is the holy grail of all collectors. Did it ever exist?"

Monday, February 2, 2009

Bourne is Back: New Home Edition

I have actually been too focused on my day job to post recently. Some the work was announced today, more will trickle out later.

Here is the announcement from EA:

Ludlum Entertainment Grants EA the Exclusive Video Game License for the Works of Robert Ludlum
Redwood City, Calif. - February 2, 2009 - Ludlum Entertainment has granted Electronic Arts, Inc (NASDAQ: ERTS) the exclusive worldwide license to create video games based on the works of Robert Ludlum, including the blockbuster Jason Bourne series. The first game to be released as part of the multi-year agreement is based on Jason Bourne and is currently in development with Starbreeze Studios in Uppsala, Sweden.

"Robert Ludlum's Jason Bourne is the most exciting action hero to emerge in decades, thrilling audiences around the world," said Mike Quigley, group vice president of marketing, EA Games Label. "EA is excited to enter into a long-term relationship with Ludlum Entertainment, bringing the action, intrigue and intensity of Robert Ludlum's fiction to life for casual and core gamers around the globe."

"The continued global popularity of Robert Ludlum's works is a testament to the care he lavished on his characters and storylines," said Jeffrey Weiner, chairman and CEO of Ludlum Entertainment and executor of the Ludlum estate. "Robert Ludlum made thrilling stories accessible and real. EA has brought that same level of realism to the gaming world. We are confident EA‘s unparalleled production ability and marketing reach will establish the Jason Bourne Series in games as powerfully and successfully as it exists in books and film."

Ludlum Entertainment recently entered into a production deal with Universal Studios to produce films based on the dozens of books in the Robert Ludlum library, as well as films outside the library. The company currently has films in development at Universal, MGM, Paramount and with Summit Entertainment.

Video game veteran Matt Wolf will work with EA to oversee the creative development, production and positioning of the Ludlum Entertainment games portfolio. Ludlum entertainment was represented in the transaction by Keith Boesky of Boesky & Company.